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Relator's request for grand jury transcripts denied without prejudice

A federal court in the Eastern District of Pennsylvania recently denied a relator’s motion seeking disclosure of all grand jury transcripts generated during the course of the government’s five-year criminal investigation of the relator’s allegations. The court noted that the request was premature and granted the relator permission to renew the request on a witness-by-witness basis should traditional discovery of each witness turn out to be inadequate.

On July 3, 2003, the relator, a former sales manager of a biotechnology company, filed a qui tam action against the company alleging that it illegally marketed off-label uses of a drug used to treat certain types of blood cancer in violation of the federal False Claims Act (the “FCA”). See United States ex rel. Underwood v. Genentech, Inc., Civil Action No. 03-3983 (E.D. Pa.). From 2003 until 2009, the government sought eight extensions of the sealing order while it conducted its civil investigation. Id. at 2. The DOJ’s criminal division also began an investigation of the company in 2003. Through 2008, a grand jury sitting in the Eastern District of Pennsylvania investigated the relator’s allegations, concluding without the return of an indictment. On September 29, 2009, the United States filed a notice of election to decline intervention. The court unsealed the case on December 18, 2009. Id. at 3.

On August 30, 2010, the relator filed a motion for disclosure of all grand jury transcripts pursuant to Fed. R. Crim. P. 6(e). Although Rule 6(e) prohibits disclosure of any “matter occurring before the grand jury,” there may be exceptions. For example, a court may authorize disclosure “preliminary to or in connection with a judicial proceeding.” Fed. R. Crim. P. 6(e)(3)(E)(i). Relying on Douglas Oil Co. v. Petrol Stops Nw., 441 U.S. 211, 218 (1979), the court observed that “[a] party seeking disclosure of grand jury materials under this exception must show (1) that the materials sought are necessary to avoid possible injustice in another proceeding, (2) the need for disclosure is greater than the need for secrecy, and (3) the request is structured to cover only those materials satisfying the first two requirements.”

When analyzing whether disclosure of the grand jury materials was necessary to avoid an injustice, the court observed that courts have generally declined to find injustice when the information presented to the grand jury is available through customary discovery. The court also noted that the time and expense of conventional discovery usually will not outweigh the need to maintain grand jury secrecy. The court was moved, however, by the relator’s suggestion that “essential testimony may be unavailable through discovery because of the Government’s unnecessarily long civil investigation of this matter.” Id. at 8. The court held that until the grand jury witnesses were deposed, it could not determine whether relator’s “concerns regarding fading memory and the like are warranted.” Id. at 9.

When weighing the need for disclosure versus the need for secrecy, the court was not persuaded by the relator’s contention that he needed the grand jury transcripts for “impeachment material” because the relator may develop such material through customary civil discovery. The court also observed that maintaining secrecy of grand jury proceedings is especially important where – as here – the investigation concluded without the return of an indictment. Accordingly, the court held that “at this stage, the interests compelling grand jury secrecy outweigh Relator’s interest in obtaining the transcripts….that calculus may change after Relator begins deposition discovery.” Id. at 9-10.

When evaluating whether the relator’s request was sufficiently narrow, the court held that relator’s request seeking all grand jury testimony did not meet the particularized need requirement set forth by the Supreme Court in Douglas Oil. The court further held that “[i]f discovery reveals that significant testimony is no longer available except through disclosure of grand jury materials, Relator may renew his request witness by witness.” Id. at 11.

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